Lock in Prices to Make Money on 2014 Crops

Farmers need to carefully monitor the markets to profit on new crops, two marketing experts tell "U.S. Farm Report."

Farmers might have to overcome a reluctance to lock in prices using futures contracts if they want to make money on 2014 corn and soybean crops. That was the opinion shared by Andy Shissler of Roach Ag Marketing and Chip Nellinger of Blue Reef Agri-Marketing during the "U.S. Farm Report" Marketing Roundtable.

Although both analysts expect an acreage shift from corn to soybeans this year, Nellinger thinks the shift will be marked. "I’m in a minority," he said. "But in talking to farmers, I think there’s already been a big shift from corn to beans, even in the best areas of the Corn Belt where it’s always been corn, corn, corn."

Shissler, on the other hand, believes the shift might not be as pronounced if corn prices gain on bean prices in February or early March. "But at this point we are probably going to lose some corn acres," he said.

Shissler holds out some hope that corn prices will rally before June, allowing farmers to "make a little bit of money." If new-crop corn prices move into the profit zone, "farmers better be ready" to pull the trigger on futures, he said.

Farmers should closely monitor soybean prices as well. Although soybeans look profitable now, Nellinger warns that prices could fall once the size of the 2014 crop becomes clearer. He adds that the size of the Brazilian crop looks "really big," bigger than the U.S. crop.

"When you get bean rally up around $11.50, you need to do something to protect your profit margins on new-crop beans, especially if you plan on planting more of them," he said. "Farmers haven’t done much to protect those prices. If you take 50 to 70 cents out of new-crop bean prices, all of a sudden it’s not profitable anymore."